Metinvest reports July EBITDA of USD 147 mln

Ukraine’s largest steelmaker Metinvest (METINV) reported EBITDA of USD 147 mln in July (+24% m/m), according to a monthly financial report published on September 29. The monthly results imply that Metinvest generated EBITDA of USD 726 mln in 7M16.

Its operating cash flow before working capital changes improved 16% m/m to USD 110 mln in July, but the bulk of it was absorbed by working capital investments (USD 75 mln, -10% m/m), as tradition. The holding’s CapEx was USD 25 mln in July (+44% m/m). Cash outflow from financial activities was USD 29 mln (compared to inflow of USD 28 mln in June), leading to a decrease in cash to USD 172 mln (-6% compared to June). Recall, the holding reported earlier that its average unrestricted cash for August was USD 184.7 mln, which enabled it to pay additional interest to creditors in the amount of USD 4.7 mln in September.

Andriy Perederiy: Based on the July results, we estimate Metinvest’s August EBITDA will be close to USD 107 mln (resulting from a 6% m/m drop in metal products sales and nearly flat prices), which will keep our annual EBITDA forecast at USD 1.2 bln. The company increased its working capital by USD 410 mln from April to July and – as its August cash data suggests – its working capital investments decreased significantly last month.  We expect Metinvest’s cash level will exceed the minimum threshold of USD 180 mln in September as well, which will enable it to distribute additional interest to creditors again. We continue to expect the holding will be able to agree on long-term debt restructuring by end-November and we are keeping our positive view on Metinvest Eurobonds.